What is a 'dual-track' exit strategy?
A dual-track exit is the parallel preparation of two exit routes — typically an IPO and a strategic sale at the same time. The sponsor decides which route to take only shortly before closing. Main purpose: pricing leverage through competitive tension.
Strategics typically bid 5–15% higher because they know the IPO exists as a backup. But: double the preparation work, double the banker cost, a longer timeline. In the middle market below $300m EV it is essentially never done — the complexity cost exceeds the pricing leverage.
Deep diveShow more details
| Aspect | Single | Dual |
|---|---|---|
| Preparation work | normal | double (docs for both routes) |
| Banker cost | 1 team | 2 separate teams |
| Speed | faster | slower |
| Hidden premium | – | typically 5–15% better pricing |
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Month 0–3: Bank mandates for the dual track
Month 3–6: Parallel preparation (IPO prospectus + M&A process)
Month 6–9: First-round bids (strategic) + IPO roadshow investors
Month 9–12: Sponsor decides which route (pricing comparison)
Month 12–15: Execution & closing
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- Confidentiality issues: a dual track raises the leak risk (more parties involved).
- Bank mandates: double the fees, typically 1–1.5% per track.
Question: "When does a dual track make sense?"
Answer: "For large caps above $500m EV where an IPO is realistic. In the middle market it is typically single track only — the complexity cost exceeds the pricing leverage. Essentially never below $300m EV"